Medicaid work rules would come at high cost to Kansas, Kelly official warns lawmakers

Gov. Laura Kelly’s administration is warning lawmakers against including work requirements in Medicaid expansion, cautioning the rules would cause many people to cycle in and out of the program, raising costs and possibly increasing the number of residents without health insurance.

As states across the country have expanded eligibility for Medicaid, the health insurance program for low-income families, Republicans have pushed several to adopt work requirements. Many of those states now face legal roadblocks that have kept the rules from going into effect.

Still, some conservative Kansas lawmakers continue to pursue the idea, saying it helps people climb out of poverty. On Tuesday, Lee Norman, secretary of the Kansas Department of Health and Environment, told legislators that work requirements would significantly raise the burden on the agency.

Work rules – as well as drug testing requirements – would result in “huge amounts” of churn of recipients through Medicaid, he said, though the agency hasn’t estimated exact numbers. Individuals would get onto Medicaid only to be kicked off after they failed to comply with rules.

All of it would increase the number of Medicaid applications and the amount of work the agency must perform, he predicted. How many dozens or hundreds of additional employees would be needed to cope, he wondered. How many additional computers would be needed, he asked.

“I think it’s a staggering number,” Norman said.

The secretary tucked the comments into an otherwise typical update about the operations of the state’s Medicaid program, called KanCare.

The debate over Medicaid is intensifying as lawmakers head into the last two months before the legislative session begins. Despite strong pressure from the newly-elected governor, legislators were unable to pass expansion this year after conservatives blocked it from moving forward amid chaotic protests.

Since then, Senate Majority Leader Jim Denning, an Overland Park Republican, has put forward his own expansion plan after years opposing previous proposals. Denning faces a tough re-election race against a Democrat who has been a vocal expansion supporter.

But neither Denning nor Kelly are calling for work requirements. Denning’s plan includes a work assessment that would refer applicants to resources for finding or training for a job, but not mandated employment.

“From most of our perspective, it’s not a punishment, it’s an incentive,” Rep. Brenda Landwehr, a Wichita Republican who chaired a special House committee on expansion earlier this month, said of work requirements.

Landwehr suggested Norman and his deputies could help lawmakers figure out “a creative way to do it.” She acknowledged frustration with the churn of enrollees but asked “how can we make that smoother and still get that same result of trying to give people that hand up instead of a hand out?”

Kansas could face lawsuits if it goes forward with a work requirement. While the Trump administration has been approving state requests for work rules, judges in several cases have blocked the changes.

Arizona and New Hampshire have suspended them. Rules in Arkansas and Kentucky are being held up in court.

An October report from the federal Government Accountability Office found that states with work requirements run up millions in enforcement costs. In Arkansas, where 115,000 people are subject to the requirements, the report said administrative costs would total $26.1 million.

A June study in the New England Journal of Medicine said that surveys of low-income adults in Arkansas suggest work requirements were associated with a decline in the number of people on Medicaid and an increase in the number of people without health insurance.

“There’s been a lot of research done on Arkansas and the results have been pretty clear. It results in people losing coverage but it does not result in people getting jobs,” Sheldon Weisgrau, a senior policy advisor at the Alliance for a Healthy Kansas, said.

With or without work rules, expansion would be a momentous event in Kansas. Some 130,000 residents would be newly eligible to enroll, representing a 31 percent increase in program recipients, according to estimates from the Kansas Health Institute.

The federal government pays 90 percent of the cost of expansion as long as states open the program to people making up to 138 percent of the federal poverty level. That’s about $35,500 for a family of four.

Conservative opponents have maintained that expansion will prove costly. The Kansas Health Institute estimates the state would ultimately pay roughly $520 million over a decade. Opponents also say it leaves Kansas vulnerable to huge expenses if the federal government ever stops picking up its share.